How Leading Companies Are Embracing the Experience Economy
Experience has morphed into an economy, one that’s quickly gaining eager participants. From Airbnb to Apple, leading companies are experimenting with ways to incorporate this trend into business development and marketing strategies. To realize the full potential of creating experiences, companies should be bold, unique, and creative in discovering what works for them.
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An article published by the Harvard Business Review defines an experience as “when a company intentionally uses services as the stage, and goods as the props, to engage individual customers in a way that creates a memorable event.”
According to McKinsey, spending on experience-related services has grown at a rate 1.5 times compared to personal-consumption purchases, and almost four times faster than spending on goods. From 2014 to 2016, the average annual personal consumption expenditure growth across the board was 3.7%. However, the growth in experience related services was 6.3%, as opposed to 4.7% for total services and 1.6% in total goods.
The categories within the experience spectrum is eclectic. According to the Bureau of Economic Analysis, they include membership clubs, sports centers, parks, theaters, events, museums, casinos, food service, accommodations, air travel, package tours, and foreign travel by Americans.
Several familiar activities are among the fastest growing experience categories. Amusement park and amusement park-related activities like go-kart racing, escape rooms, and bowling top the list. Attending spectator sports is the second-fastest growing experience, which is followed by live entertainment in various forms, such as comedy clubs, piano bars, and themed dinner shows. Membership clubs, sports centers offering exercise classes from yoga and Pilates, and movie theaters round out the list.
Drivers of the Experience Economy
According to Fortune, Americans’ spending on travel, recreation, and dining out as a percentage of household spending increased between 2000 and 2015. Spending on cars and household goods decreased during this interval. There are several reasons why experiences have become more valued compared to purchasing products. Firstly, research has demonstrated a deeper psychological link between happiness and sharing experiences with loved ones. Experiences also become a more meaningful part of an individual’s identity and have a greater tendency to be interpreted more positively. Experiences also tend to foster social relationships.
Types of Experiences
There are two essential experience types. The first one involves customer participation, which is when the customer takes part in the experience either actively or passively, like attending a music concert. The second one links to connection, which is when the customer connects on either a mental or a physical level, such as the case with a virtual reality game.
ThirstyNet, Apple, and Airbnb are just a few companies successfully capitalizing on the experience economy.
The wine and spirits-themed wedding registry ThirstyNet was founded on the rationale that, since Millennials are marrying at ages older than prior generations, they don’t need basic home items. The company’s most popular feature is the one-click registry, which offers a personalized selection of items to the user. ThirstyNet also offers users the option to create vanity URLs and personalize drinkware. Another way the company innovates the wedding registry experience is through its list management tools and functional items. Using these tools, users feel like every addition is intentional and valuable, and they avoid overconsumption.
The tech giant Apple may be known for its products, but it’s also leading in the experience economy with its “Today at Apple” initiative. Through this program, the company offers educational programming that not only teaches customers how to use its tech, but also encourages them to explore other interests including art, design, music, and photography. Apple is also expanding beyond addressing the immediate tech needs of its customers to providing information pertaining to their lifestyles, aspirations, and dreams. According to Apple’s Senior Vice President of Retail Strategy Angela Ahrendts, “The overarching vision of the future of Apple retail…is what do we want Apple’s role in the community to be?…The store becomes one with the community.”
Since Airbnb’s founding in 2008, the company’s shook up the hospitality industry with their notion that travelers could stay at homes around the globe and skip making hotel accommodations. It worked – the company has reported doing 1.5 million annual bookings and boasts an approximate value of $31 billion. Airbnb is now looking beyond renting homes to building a global travel community based on experiences. Travelers can enjoy local-led experiences as they explore surrounding sights and attraction.
Tips to Creating Experiences
Before planning experiences, business leaders should ask themselves important questions and keep in mind a few tips. Some of the key questions involve the quality of their location and whether the implantation of allegiance-building programs like rewards programs make sense. Business leaders should also think about ways their experience strategies can integrate with brand social media or align with long-term goals.
It’s easy to get caught up in admiring the successes of leaders and pioneers, and it’s difficult to forge a new path filled with uncertainty and risk. The experience economy is sure to bring rewards to those brave enough to embrace creativity guided by strategy. Entrepreneurs and established businesses should bear in mind guiding principles and tips, but also welcome the unknown, yet exciting, opportunities that will come during the process of creating unique brand experiences.